First of all, let me emphasize that my decisions are often wrong, and stocks often go up after I sell out of them (AMBA, for instance), so don’t sell just because I did if you have conviction in the company.
Now, I sold out of my position in UBNT. Why? A combination of four reasons.
- Last quarter! Granted that’s a very short term reason. However revenue was down sequentially, AND basically flat with the first quarter, AND up less than 10% from three quarters ago (Dec 2013). This isn’t seasonal as last year’s Sept quarter was $130 million up sequentially from $101 million (up almost 30% sequentially and up more than 100% year over year).
Adjusted earnings were 48 cents, DOWN from 56 cents sequentially, DOWN from 50 cents the quarter before that, and FLAT with 48 cents the quarter before that, and up only 2 cents from a year ago. That’s pretty much no growth in a year.
Long term prospects! Their goal is to sell to WiFi Internet service providers (WISP’s) to enable internet in hard to reach places around the world. Well Google is working on establishing a network of balloons around the world to enable FREE internet in underdeveloped countries, Elon Musk is talking about setting up a network of satellites to enable FREE internet in underdeveloped countries, and some other companies are putting up limited numbers of satellites to provide internet access in underdeveloped… well you get the idea. Granted, this is all long range, and may never happen, but in a few years, technology may have made their whole business obsolete.
Pera. He is the owner of the Memphis Grizzlies basketball team in the NBA. He seems to pay a lot more attention to the Grizzlies than to UBNT. Here’s an excerpt from a sports article (not an investing article) from May 2014 that I hit by just googling Robert Pera:
Robert Pera is the owner of the Memphis Grizzlies; that is to say, he’s the man at the epicenter of the NBA’s strangest spectacle over the past week. CEO Jason Levien and assistant general manager Stu Lash were abruptly fired last week, and coach Dave Joerger seemed all but sure to hit the road and accept the Minnesota Timberwolves’ vacant job. Instead, news broke Sunday night that Joerger would stay in Memphis despite the organizational turmoil.
As it turns out, Pera wanted to replace Joerger five games into his first season as a head coach, and Pera had some truly strange ideas as to how the team would move forward after hypothetically firing a coach with a 2-3 career record.
After the first five games of the season, Pera flew to Memphis and held individual meetings with players. In those meetings, he began offering a handful of suggestions, according to Sports Illustrated’s Chris Mannix, one of which was that Joerger should be fired as coach and replaced by player-coach Mike Miller…
Pera had A LOT of trouble in the Conference Call answering questions about UBNT’s sales. I’ll bet he was up on all the statistics of Grizzlie players. This is too much of a distraction. It’s what someone does when they retire from business, not while they are the CEO of a growing company. I was aware of this a year ago, but everything seemed to be going well for the company. Now I’m not so sure
- I found two companies I liked better to put my money in: CRTO and FB.
Hope this is of help.